President Donald Trump said on July 13 that the United States would impose a 20 percent tariff on all cargo transiting the Strait of Hormuz, as the US reimposed what he called the “Iran blockade.” The announcement came hours after Iranian cruise missiles hit two UAE-flagged oil tankers in the strait, killing one Indian crew member and wounding eight others.
The legality of a unilateral fee on a strategic waterway is deeply uncertain. The Forward Seamen’s Union of India demanded that New Delhi act, after a 52 percent week-on-week collapse in strait traffic amplified the human cost of the escalating US-Iran conflict.
For weeks, US Central Command has bombed Iranian positions to “degrade” Tehran’s ability to attack commercial vessels. On the evening of July 13, President Donald Trump added a commercial layer: the US would begin charging a fee on all cargo passing through the Strait of Hormuz. The post on Truth Social was characteristically blunt—the United States would be the “Guard of the Hormuz Strait,” and it would cost.
Within twenty-four hours, the cost was already being counted in bodies. Iranian cruise missiles struck two UAE-flagged tankers, the Mombasa and Al Bahiyah, as they moved through Omani waters in the strait’s southern lane. One Indian crew member on the Mombasa was killed; eight others were wounded, six of them Indian nationals. The Forward Seamen’s Union of India (FSUI) asked on X: “How long will we keep counting the deaths of our seafarers? When will the government act?”
The tariff that added a price to the posturing
On July 13, Trump wrote on Truth Social: “The Strait of Hormuz is OPEN… We are reimposing the IRAN BLOCKADE… the United States, from now on, will be known as the ‘GUARD OF THE HORMUZ STRAIT’, but as such… will be replaced by a loss, with a 20 percent tariff for all cargo sent.” The claim, if enforced, would rewrite the economics of a waterway that carries about a fifth of the world’s daily crude shipments.
Shipping analytics firm Kpler said traffic through the strait had already fallen 52 percent week on week between July 10 and July 12. Brent crude jumped 7.8 percent to $81.92 a barrel, markets showed, though still well below the near $120 peak seen earlier in the conflict.
The UAE Defence Ministry confirmed the two tankers were hit by Iranian cruise missiles while transiting inside Omani waters. It called the strike a serious breach of international law and said the UAE retained “its full right to respond to this escalation.” Six of the eight wounded were Indian nationals; two were Ukrainian, the ministry added.
The FSUI, for its part, listed the vessels that had been attacked with Indian crew aboard in recent weeks—MT Settebello, MT Marivex, MT Jalveer, MT Safesea Vishnu, and now Mombasa—and demanded an international push through the International Maritime Organization and International Labour Organization. It asked: “How long will we keep counting the deaths of our seafarers? When will the government act?”
For an Indian crewman on a tanker entering the strait, the distinction between a blockade and a missile is academic.
India wants protection for its seafarers and to avoid a domestic political backlash. The UAE wants to stop attacks on its flagged vessels and preserve maritime credibility. Iran wants leverage over shipping and retaliation against US pressure. The United States, through its Centcom airstrikes, wants to restore deterrence while claiming control over the waterway.
US Central Command said on July 12 that operations would continue to “further degrade Iran’s ability to attack commercial shipping.” A month earlier, US naval fire killed three Indian crewmen on a merchant ship off Oman, prompting a formal Indian protest. The pattern is tightening.
| Country | Current rule | New rule | Effective date |
|---|---|---|---|
| United States | No tariff on strait transits | 20% cargo tariff on all strait transits | Announced July 13 |
| United States | No blockade | “Iran blockade” reimposed | Announced July 13 |
| UAE | No public military response threshold | “Retains full right to respond” to attacks on its vessels | July 14 |
| India | No specific policy | FSUI calls for IMO/ILO intervention and government protection | July 14 |
The collapse in traffic and the crude spike are captured in the data. But the legal mechanics of collecting a fee on a global waterway remain untested.
A fee no mechanism can collect
The UNCLOS framework guarantees unimpeded transit passage through international straits. A unilateral tariff, imposed without allied enforcement, faces a near-certain challenge at the International Tribunal for the Law of the Sea. The US never ratified the convention, but it has long treated its core passage rules as customary law. Changing that now would require more than a Truth Social post.
A maritime blockade, meanwhile, is a wartime measure under the law of armed conflict. Its scope, notification obligations, and impact on neutral shipping are tightly proscribed. The “Iran blockade” Trump invoked has no declared legal basis and risks being treated as an act of economic coercion by China, India, and even European allies.
The last time U.S. naval fire killed Indian crewmen—just a month earlier—New Delhi lodged a formal protest. That earlier incident and the present one now frame the same question: can a power that claims to guarantee safety also tax passage? The answer, for the moment, is being written in insurance premiums and rerouted tankers, not in lawbooks.
The US tariff may never be collected from a Liberian-flagged tanker. But the question the Indian union asked—”How long will we keep counting the deaths of our seafarers?”—is already being answered with each new missile strike.
Beyond the headline
The Human Cost
The immediate burden falls on Indian merchant seafarers working on Gulf routes, where nationality does not shield crews from a widening state-on-state fight. The same job that links India’s labour market to the Gulf now exposes individual crew members to casualties that quickly become a domestic political issue in India.
The Power Behind It
The real leverage sits with Washington, because the US can combine military pressure, sanctions language, and public claims about maritime security into a single coercive message. That matters because the toll proposal is not just an economic measure; it is part of a broader attempt to redefine who sets the rules in the strait.
The Reach
One mechanism is the disruption of tanker insurance pricing. That single pricing change can move quickly into European and Asian fuel costs even before any formal policy decision is made.
Decisions that cannot wait for Washington
With a US tariff announced but not yet enforced, the shipping, energy, and insurance sectors face a set of urgent assessments.
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Western maritime insurance underwriter
Revisit war-risk premiums and Gulf navigation terms. Consult the UK Maritime & Coastguard Agency’s shipping safety guidance for the Strait of Hormuz immediately. The last traffic collapse triggered automatic exclusions; another could force Lloyd’s syndicates to reprice the entire Gulf transit zone.
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European energy trader with Gulf crude exposure
Reassess supply chain reliability. The 7.8-percent oil price spike is a preview of what a sustained tariff or strait closure would mean. Hedge positions against further volatility, and consider securing alternative crude grades from West Africa or the North Sea. Review the US Department of State’s maritime security notices for updated transit risk levels.
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US-based supply chain manager for APAC imports
Model the cost impact of a 20-percent surcharge on Gulf-transiting cargo. Even if the tariff is never collected, insurers and carriers may price it into contracts. Start exploring rerouting options via the Cape of Good Hope, and check the US Department of Transportation’s maritime security advisories for compliance expectations.
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Western parent of an Indian seafarer
Contact the employer or manning agent to clarify the vessel’s planned route and the company’s duty-of-care obligations in the conflict zone. Urge the shipping company to subscribe to the UKHO’s navigation warnings for the Gulf, and press for a clear repatriation plan if the vessel enters a high-risk area.
FAQ
Can the US charge a fee on transit?
The US can announce it, but enforcing a tariff on a foreign-flagged vessel in international waters is legally fraught. The United Nations Convention on the Law of the Sea guarantees unimpeded transit passage, and any fee would likely be challenged at the International Tribunal for the Law of the Sea. Practically, collecting it would require port-state cooperation that few allies are likely to offer.
What happens to insurance?
War-risk premiums for vessels in the Gulf have already risen sharply. The treatment of the tariff as a financial peril and its classification under existing hull and cargo policies remains uncertain and will depend on how insurers and policyholders interpret the legal status of any US-imposed fee.
What should Indian crews do?
Indian crew members can ask their employer to avoid the strait or request repatriation. The Indian Directorate General of Shipping has issued advisories urging shipping companies to provide enhanced security and evacuation plans, though enforcement is weak.
Explainer
- Strait of Hormuz
- The narrow waterway connecting the Persian Gulf to the Gulf of Oman and the Arabian Sea. It is the world’s most critical oil chokepoint, through which roughly a fifth of global crude and natural gas transits daily. Iran and Oman are the coastal states, and the strait is only 21 nautical miles wide at its narrowest point.
- Forward Seamen’s Union of India
- India’s largest and oldest union representing merchant navy officers and ratings. It has been the primary voice for Indian seafarers’ safety and labour rights, especially during Gulf conflicts. The union was among the first to press for the Maritime Labour Convention’s enforcement in India.
- UNCLOS
- The United Nations Convention on the Law of the Sea, a treaty setting out the legal framework for all maritime activities. It defines transit passage through international straits, which must remain unimpeded for all vessels. The United States has not ratified UNCLOS, relying instead on customary international law principles of transit passage.
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